final_krispy_kreme

Term Report - Strategic Management

Institute of Business Management

Strategic Management at Krispy Kreme Doughnuts Inc.

Submitted to:

Mr. Abdul Qadir Molvi

Submitted by:

1)Zahra Ramzan Ali – 79262)Zarish Safdar – 69393)Maaz Shahid – 78374)Safura – 76265)Sahar Najam – 8141

Date: 15th December, 2010

LETTER OF TRANSMITTAL

Mr. AbdulQadir Molvi,

Professor Strategic Management,

Institute of Business Management, Karachi.

Dear Sir,

This is the term report on Krispy Kreme Case-study (Strategic Management

Concepts & Cases) that was assigned to us. This report presents a complete

overview of the company in terms of its strategic management. Besides the case

study in the book, several online journals, magazines and company’s website have

been used to conduct the research. All the information we gathered has been

analyzed using different matrices taught in the class and presented in this report.

Also the recommendations for improving the strategies have been offered

throughout the report whenever some strategy has been highlighted as weak. We

hope that our report is up to your expectations.

We would be pleased to answer any queries you may have regarding the report.

Thank you.

Sincerely,

Strategic Management at Krispy Kreme Doughnuts Inc. Page 1

Group Members

LETTER OF ACKNOWLEDGEMENT

First and foremost, we would like to thank Allah Almighty, who gave us

knowledge and capability to carry out this research and compile the report to the

best of our abilities. Next, we would like to thank our professor, Mr. Abdul Qadir

Molvi, who very diligently taught us each and every concept related to strategic

management and assigned us this report which enabled us to see how everything

taught in class is being practiced by organizations in the corporate world.

It was truly an amazing experience getting to know about strategic management

processes and practices at Krispy Kreme Doughnuts Inc. and we are sure it will

help us gain a better understanding of strategic management at organization we

will work for in our future career.


TABLE OF CONTENTS

LETTER OF TRANSMITTAL.......................................................................................................1

LETTER OF ACKNOWLEDGEMENT.........................................................................................2

TABLE OF CONTENTS................................................................................................................3

COMPANY OVERVIEW...............................................................................................................4

MISSION, VISION AND VALUES...............................................................................................5

INDUSTRY DEFINITION.............................................................................................................6

INDUSTRY ANALYSIS................................................................................................................6

COMPETITORS..............................................................................................................................7

PRODUCT LINE.............................................................................................................................8

BUSINESS SEGMENTS................................................................................................................8

CORE COMPETENCIES...............................................................................................................9

MICRO ENVIRONMENT ANALYSIS.......................................................................................10

Value Chain Analysis................................................................................................................11

MACRO ENVIRONMENT ANALYSIS......................................................................................13

Porter’s 5 Forces Model.............................................................................................................13

STRATEGIC OVERVIEW...........................................................................................................16

SWOT ANALYSIS.......................................................................................................................19

EXTERNAL FACTOR EVALUATION MATRIX (EFE)...........................................................21

INTERNAL FACTOR EVALUATION (IFE) MATRIX.............................................................22

WEIGHTED COMPETITIVE STRENGTH ASSESMENT........................................................23

I/E MATRIX..................................................................................................................................26

TOWS MATRIX...........................................................................................................................27

SPACE MATRIX..........................................................................................................................29

GLOBAL REVENUE...................................................................................................................30

BUSINESS AND FINANCIAL METRICS..................................................................................30

COMPARITIVE INCOME STATEMENT..................................................................................31

KRISPY KREME’S FINANCIAL RATIOS ANALYSIS............................................................33

Key Ratios.................................................................................................................................33

5 Years Summary......................................................................................................................34

Net Worth Analysis...................................................................................................................35

REFERENCES..............................................................................................................................36


COMPANY OVERVIEWKrispy Kreme is an international retailer of premium-quality sweet treats, including its signature hot Original Glazed® doughnut. Headquartered in Winston-Salem, NC, the company has offered the highest-quality doughnuts and great-tasting coffee since it was founded in 1937 by Vernon Rudolph. Today, Krispy Kreme and its one-of-a-kind Hot Light can be found in approximately 649 locations around the world. Currently, Krispy Kreme can be found in 20 countries, including the United States, Australia, Bahrain, Canada, China, Dominican Republic, Indonesia, Japan, Kuwait, Lebanon, Malaysia, Mexico, the Philippines, Puerto Rico, the Republic of Korea, Qatar, the Kingdom of Saudi Arabia, Thailand, Turkey, the United Arab Emirates, and the United Kingdom.

Market research indicates that Krispy Kreme’s breadth of appeal extends across all major demographic groups, including age and income. In addition to their taste, quality and simplicity, Krispy Kreme doughnuts are an affordable, indulgent sweet treat. Many of its customers are accustomed to purchasing our doughnuts by the dozen for their office, clubs and family.

The Krispy Kreme brand has several unique elements that have helped us create a special bond with our customers. Their doughnuts, which are made from a secret recipe that has been in the company since 1937, have a one-of-a kind taste that generations of loyal customers have grown to love. The Hot Doughnuts Now sign, when illuminated, is a signal to the customers that the signature product, hot Original Glazed® doughnuts, is being made. The Hot Doughnuts Now sign is a strong impulse purchase generator and an integral contributor to the brand’s mystique. Krispy Kreme is also committed to strong local community relationships. Their store operators support their local communities through the popular fundraising programs and the sponsorship of local events.

Their vertically integrated, automated system is designed to create high quality, consistent doughnuts in an efficient manner. Quality control starts with their manufacturing plant, which produces proprietary Krispy Kreme mixes—their state-of-the-art laboratory runs quality tests on all key ingredients and each batch of mix.

The approximate number of employees is Approx. 3,900.


MISSION, VISION AND VALUES

Mission

To touch and enhance lives through the joy that is Krispy Kreme.

Vision

To be the worldwide leader in sharing delicious tastes and creating joyful memories.

Values

They believe...

Consumers are our lifeblood, the center of the doughnut There is no substitute for quality in our service to consumers

Impeccable presentation is critical wherever Krispy Kreme is sold

We must produce a collaborative team effort that is unexcelled

We must cast the best possible image in all that we do

We must never settle for "second best;" we deliver on our commitments

We must coach our team to ever-better results


INDUSTRY DEFINITIONKrispy kreme as a whole is the part of restaurant industry but it can be further

categorized into Quick Service restaurant or fast food industry.

The industry is basically product based but the concept of service has been widely integrated into it. By sector, it can be categorized into tertiary industry and by size it is a global industry since the trend of fast-food has been accepted and implied all around the world. Based on target market, this is an international industry and it is fragmented.

INDUSTRY ANALYSISIn the United States, the QSR segment is the largest segment of the restaurant

industry and has demonstrated steady growth over a long period of time. According to The NPD Group, which tracks consumer usage of the foodservice industry, QSR sales have grown at an annual rate of 3% over the past 10 years. The National Restaurant Association projected QSR sales to rise 3% in calendar 2010 from the $160 billion posted in calendar 2009.Information Resources, Inc. data indicate that, during calendar 2009, doughnut sales rose approximately 5% year-over-year in grocery stores and rose approximately 3% in convenience stores in 2009.

In addition to retail doughnut outlets, the domestic doughnut market is comprised of several other sales channels, including grocery store packaged products, in-store bakeries within grocery stores, convenience stores, foodservice and institutional accounts, and vending. Customer service, including frequency of deliveries and maintenance of fully stocked shelves, is an important factor in successfully competing for convenience store and grocery/mass merchant business. There is an industry trend moving towards expanded fresh product offerings at convenience stores during morning and evening drive times, and products are either sourced from a central commissary or brought in by local bakeries. In


the packaged doughnut market, Krispy Kreme competes for sales with many sweet treats, including those made by well-known producers, such as Dolly Madison, Entenmann’s and Hostess, as well as regional brands.

COMPETITORS

Following are the direct and indirect competitors of Krispy Kreme:

Dunkin' Donuts is the world's largest coffee and baked goods chain, serving more than 3 million customers per day. Dunkin' Donuts sells 52 varieties of donuts and more than a dozen coffee beverages as well as an array of bagels, breakfast sandwiches and other baked goods.

LaMar’s Doughnuts’ strategy is to go to its customers by operating neighborhood, bistro-style doughnut stores with gourmet espresso bars in high traffic areas. Currently they operate 40 franchised and company owned gourmet doughnut stores in seven states, and the goal is to open 1200 stores nationwide by 2010.

Tim Hortons (THI) is the largest fast food restaurant chain in Canada (and the fourth-largest in all of North America) based on sales and number of restaurants. Tim Horton's also has a food menu to complement its beverage selection, offering doughnuts, sandwiches, and other food items.

Starbucks (SBUX) is an international coffeehouse that has built one of the world's most powerful and recognizable brands upon high-quality coffee and the unique "Starbucks Experience." Starbucks has sought to capitalize on its growing popularity through expansion; the addition of over 1500 stores in just over a year brought its total store count to over 16,600 in 2008.

McDonald's (MCD) is the world's largest fast food restaurant chain with over 32,000 locations in over 110 countries. McDonald's operates its own restaurants and franchises its brand to local businesspeople (about 70% of the world's McDonald's restaurants are franchised).


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Wendy's International (WEN) is one of the world's largest restaurant operating and franchising companies, with over 6300 Wendy's franchises in North America and over 300 franchises abroad.

PRODUCT LINE

Krispy Kreme’s product line consists of the following:

1) Doughnuts2) Coffee3) Iced drinks and Kool Kremes

BUSINESS SEGMENTS


Company Stores

The Company Stores segment is comprised of the doughnut shops operated by the Company. These stores sell doughnuts and complementary products through the on-premises and off-premises sales channels and come in two formats: factory stores and satellite stores. Factory stores have a doughnut-making production line, and many of them sell products through both on-premises and off-premises sales channels to more fully utilize production capacity. Satellite stores, which serve only on-premises customers, are smaller than most factory stores, and include the hot shop and fresh shop formats. As of January 31, 2010, there were 83 Company stores in 18 states and the District of Columbia, including 69 factory and 14 satellite stores.

Domestic Franchise Stores

The Domestic Franchise segment consists of the Company’s domestic store franchise operations. Domestic franchise stores sell doughnuts and complementary products through the on-premise and off-premise sales channels in the same way and using the same store formats as in the Company Stores segment. As of January 31, 2010, there were 141 domestic franchise stores in 29 states, including 104 factory and 37 satellite stores.

International Franchise stores

The International Franchise segment consists of the Company’s international store franchise operations. International franchise stores sell doughnuts and complementary products almost exclusively through the on-premises sales channel in the same way and using the same store formats as in the Company Stores segment, and also using a kiosk format. A portion of sales by the franchisees in the United Kingdom and in Australia are made to off-premises customers. As of January 31, 2010, there were 358 international franchise stores in 18 countries, including 95 factory and 263 satellite stores.

CORE COMPETENCIES


Eventhough Krispy Kreme has vertically integrated but their core competency is still in the doughnut making business. Krispy Kreme has strategic advantage over others because of forward and backward integration. Its subsidiaries are

Principal Subsidiaries: Krispy Kreme Doughnut Corporation; Krispy Kreme Distributing Company, Inc.; Krispy Kreme Coffee Company, LLC; Krispy Kreme Mobile Store Company; HD Capital Corporation; HDN Development Corporation; Montana Mills Bread Co., Inc.; Panhandle Doughnuts, LLC; Oliver Acquisition Corp.; Krispy Kreme International Ltd. (Switzerland); Hot Doughnuts Now International Ltd. (Switzerland); Krispy Kreme Europe Limited (U.K.).

There are other big players in the industry such as Dunkin Donuts, Winchell`s Donut House, Tim Hortons and LaMar`s Donut but the point that differentiate Krispy Kreme from other players is the “HOT DOUGHNUT EXPERIENCE” and the company owned stores that give a classic touch to the donut experience which it termed as “Doughnut Theatre”Since the company has integrated vertically well and has also installed the IVS (Integrated Virtual System), Integrated Visual System’s sole focus is to deliver world class solutions to meet client’s warehouse management and automated data collection (ADC) requirements. IVS supports ADC systems in term of distribution. Effective management of these systems have enabled Krispy Kreme to secure a strategic position and to focus on its core competencies.

MICRO ENVIRONMENT ANALYSIS

The U.S Market for Doughnut was $10 billion. The Major portion of 45% market share was held by Dunkin donuts. Dunkin Donut was the world`s largest coffee and baked-good chain. In contrast to Krispy Kreme it emphasize more on coffee and convenience. Dunkin Donut had threat from Starbuck which the countered by adding a wider variety of hot-and cold-coffee beverages, and beating Starbuck in time management. Quick and consistence service was the Dunkin donut focus.

Winchell`s Donut house was also proposing itself as a fresh glazed donut maker. It initiated program like WARM N FRESH and replacing donut after every 15-20 minutes between certain times. It initiated several promotional schemes to combat Krispy Kreme. It brought some innovation by adding low-fat doughnuts, muffins and bagels.


Tim Hortons was another name in the market and it specialized in coffee and baked doughnut. Eventhough half of its sales include coffee without donut. Another point of difference was the 24 hour drive through at Tim Hortons. Similarly LAMAR`s Donut was famous for its customized product and its doughnut were of “artisan quality”. The biggest surprise with respect to other companies was that “a day old donut were never sold at the shops but were donated at day`s end to the needy”.

All these companies had some portion of market since the size of market was so huge that every company was doing good in its area of expertise. Moreover, some small vendors were also happy since giants like Krispy Kreme and others used to invest heavily on marketing and promotion which was simply increasing awareness and size of the market

Value Chain Analysis

Krispy kreme had developed a vertically integrated supply chain whereby it manufacture mixes for its doughnuts at company plant in North Carolina and Illinois and it also manufactured doughnut making equipment for use in both company-owned and franchise stores.

The sales of mixes and equipment, was carried out by “KK manufacturing and Distribution”. The company revamped the stores to better attract the customer. The idea was to leverage the interest generated in Krispy kreme products to secure supermarkets and convenience stores accounts.

Krispy kreme soon became popular with Krispy Kreme coffee. Beverage sales of Krispy Kreme accounted for 10 % of company`s sales out of which coffee had half of the contribution. To Improve the efficiency, caliber and appeal on its on-premise coffee and beverage offerings, aligning it more closely with the hot doughnut experience in its stores. Krispy Kreme acquired Digital java Inc., a coffee company the sourced and roasted premium quality coffee and that marketed a broad line of coffee based and non-coffee beverages.

Company-owned stores had a major role in catalyzing the products of Krispy kreme. Each operation of company created a value for the customer, the most important one being given the “Hot Doughnut experience” depicting the freshness of the doughnut. The company did not sell the doughnut rather it gave its customers the experience of Doughnut.


One other important perceived value for the customers was the experience of watching doughnut being through a 40 feet glass window. The company had drive through window and dining area that had enough capacity of 50 people or more.

The company had developed highly effective system for delivering fresh doughnuts, both packaged and unpackaged, to area retail stores. Route drivers had the capability to take customer orders and deliver product directly to retail accounts. Krispy Kreme stores actively promoted sales to school, churches, and civic group for fund-raising drives.


MACRO ENVIRONMENT ANALYSIS

Porter’s 5 Forces Model

Room for growth in the coffeehouse and snack chain industries

According to a study by Market Force Information, there is still considerable room for growth in the coffee house and snack chain industries. According to a recent survey, most consumers visit a coffee shop around once a week, with 70% reporting that they go to coffeehouses or snack restaurants less than five times a month. Many reported that they use time at a coffee or snack restaurant to reflect, or as an escape. That, coupled with the


fact that just 4% of consumers reported trying a new coffeehouse or snack restaurant in the last 30 days, indicates big room for growth for chains.

When asked which coffeehouse or snack restaurants were their favorites, Starbucks was cited by 36%, Dunkin’ Donuts by 28%, and Krispy Kreme by 16%. However, when the number of locations is factored into the results, Krispy Kreme wins wins 35% of the vote.


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Krispy Kreme also outscored competing coffee shops and snack chains on eight of 10 attributes (attributes included Quality of Food, Taste of Food/Coffee, Speed of Service, Friendly Service, Cleanliness, Atmosphere, Accommodating, Overall Value, Healthy Choices, Green/Sustainability). All other competitors clustered together with very little differentiation.

Health Fads and Consumer Shift Toward Health Conscious Diets Affect Sales Environment of Krispy Kreme

One original Krispy Kreme glazed doughnut contains 200 calories and 12 grams fat. A glazed, raspberry filled doughnut contains 300 calories and 16 grams fat. One apple fritter contains 380 calories and 20 grams fat. An increased level of health conscious people may hurt sales of Krispy Kreme doughnuts. However, obesity in the United States remains high, and a shift towards health conscious diets is not an immediate threat to Krispy Kreme's bottom line.

In fact, Krispy Kreme's international locations are benefitting from a drop in health conscious behaviors among consumers. For example, since opening stores in Japan in 2007, Krispy Kreme saw strong sales in that country. Food writer Mei Hojo says health-conscious eating remains a big trend in Japan, but it has also produced backlash, especially for American-style food.


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STRATEGIC OVERVIEW

Krispy Kreme’s ability to align strategy and execution with the brand’s highest potential defines their capacity for vision and creativity. They place having both brand value and internal cultural values as a key priority. Using their brand as a platform, Krispy Kreme has developed strategies such as linking everything they do by, understanding, protecting, and promoting their brand, establishing the brand with the “Hot Doughnuts Now” experience, penetrating complementary, off-premises channels of sales. They are committed to building an organization based on common values of integrity, authenticity, passion, learning, sharing, and positive expectations. Their commitment to value serves as a stage for all policies and programs that affect internal and external relationships. Developing a successful strategy in standard cycle market proves to be relatively simple for Krispy Kreme. However, if looked at too simply, a company will choose a strategy that is too narrow or too broad based on the other factors of choosing a strategy. Determining which customer needs to satisfy is an area where choosing the incorrect strategy can result in a decreased competitive advantage.

Currently Krispy Kreme implements a differentiation strategy, attempting to distinguish their doughnuts based on taste, quality, and simplicity.This seems to be the norm for the doughnut industry. Companies in this industry choose to compete based on their unique tastes or variety of flavors as potential competitive advantages, rather than cost. Krispy Kreme chooses to emphasize its secret yeast raised doughnut recipe. However, doughnut companies have also succeeded their cost position through vertical integration, by having an automated system, designed to create high quality, consistent doughnuts. Krispy Kreme manufactures their own custom doughnut making equipment for all of their restaurants. Krispy Kreme chooses not to segment its market, believing that their breadth of appeal extends across all major demographic groups, including age and income. Concentrating on a large market seems to be the norm among competitors as well. Where they seem to fall behind the curve is in choosing an appropriate corporate, cooperative, or international strategy. Perhaps, Krispy Kreme’s most import asset is their brand name and taste. Their “Hot Doughnut’s Now” sign, serves as their biggest signal to the freshest doughnuts offered. Targeting consumer tastes is one area in which they succeed. They understand that consumers value freshness when it comes to doughnuts.

Their Doughnut Theatre Experience combined with clever marketing, creates a myth for consumers. Krispy Kreme executives understand that relying on word of mouth is more credible than paid advertising. Before Krispy Kreme enters a market they will flood that market with memorabilia including T-shirts and hats, forming an unpaid loyalty base.


However, their strongest marketing focus is their charitable efforts through giveaways, and wholesale charges to charities. By using this particular approach they continue to emphasize their small town, southern hospitality, commitment to the community, and brand value. Through a related diversification strategy, Krispy Kreme should choose to offer a variety of other products that doughnut eaters tend to enjoy. They currently offer beverages and places to sit, but what they may have slightly overlooked in the past is that frequenters of doughnut/coffee shops enjoy the atmosphere as much as the sweetness of doughnuts.

Perhaps one of their biggest attractions is the doughnut making theater, allowing customers to see the actual process of cooking and glazing the doughnuts. They have recently begun updating the look of their stores to capture the essence of their unique brand. In 2001, Krispy Kreme acquired Digital Java, Inc to broaden their beverage offering to customers. With this acquisition came the offering of different drip coffees, ranging from light and smooth to deeper, more intense blends. It also now offers espresso beverages, frozen coffee beverages, and other frozen beverages prepared with a variety of proprietary flavors5. In addition to doughnuts, they sell snack foods, real fruit pies, cinnamon buns, and mini-doughnuts3. Offering more morning sweets or health conscious breakfast items such as low fat bagels should be avenues they explore. Doughnuts are generally a morning consumption item, so means to attract more customers during the day or evening, other than freshness, sweetness, and the sign, should also be investigated. They could choose to diversify into fresh baked breads for the evenings, or deli type sandwiches throughout the day.

Another strategic decision of updating their extranet to a more standardized, browser-accessible interface has proven to be a competitive advantage for the company as well. The system let’s administrators assign only those resources users require for their framework, and protect important information from competitors. This is one of the problems of their former extranet. With the upgrade they can now quickly and securely deliver applications and data to employees anytime, anywhere4. This allows KrispyKreme to operate more efficiently and stay one step ahead of the competition. Even their cash register is an efficient low profile, space saving design, which integrates keyboard and operating screen into an intelligent compact terminal. By connecting reliable smart terminals to industry standard open system components, they can avoid many of the high hidden costs of technology ownership. Through their website, managers can log onto “MyKrispyKreme” to monitor inventory levels, and consumers and investors can log on to obtain information about the company, new and upcoming openings, newsletters, and purchase collectibles.


Their website also features a “Friends of Krispy Kreme club” where customers can sign up to be emailed regular newsletters about store openings and new flavors. This alone will remove the excessive costs of printing and distribution. Krispy Kreme has a thorough understanding of the actions and focus needed to maintain a competitive advantage as they are in their early stages of growth.

However as they continue to grow and enter new markets they may want to consider alternatives in altering or expanding upon their current strategy. A potential problem looming over Krispy Kreme executives is their low inventory turnover ratio compared to that of the inustry. Management at Krispy Kreme hope this problem will be solved by their new internet site, if not this flaw in Krispy Kreme’s supply line will continue to cost the company money and reduce future profits.

Although Krispy Kreme has done a successful job in securing their position and maintaining a competitive strategy, it is critical that they continually take strategic actions to stay ahead of the competition. Already, other companies in the doughnut industry have begun to respond to some of the successful actions by Krispy Kreme. One company has even begun to compete head to head with what Krispy Kreme prides itself on most, taste and quality. LaMar’s Doughnuts, perhaps the biggest prospective threat to Krispy Kreme has held taste tests directly competing with a variety of Krispy Kreme’s products. In one such contest, held in Springfield, Missouri, “Police and sheriff department officers judged LaMar’s Doughnuts to be superior to Krispy Kreme’s products in four of five categories: original glazed, glazed sour cream, chocolate iced and Bavarian Crème filled, and cinnamon roll. The doughnuts were judged according to taste and appearance. LaMar’s strategy is to go to its customers by operating neighborhood, bistro-style doughnut stores with gourmet espresso bars in high traffic areas. Currently they operate 40 franchised and company owned gourmet doughnut stores in seven states, and the goal is to open 1200 stores nationwide by 2010.

As critics of Krispy Kreme’s strategy have thought, their success is in large part due to the fact that they are the new kids on the block. They may want to slow their growth in location to maintain the authenticity and exclusiveness associated with high quality desired products of any kind, such as a diamonds from Tiffany’s or a doughnut from Krispy Kreme. Everyone in the bakery/sweets industry attempts to differentiate their product based on quality and taste. It is only those with an entrepreneurial mindset and vision who can provide an innovative, competitive advantage building idea or capability. Krispy Kreme has achieved this with their doughnut theatre by offering customers something they don’t see often, a first hand view of the frying and glazing process. Cinnabon has realized the advantage of this unique featured and copied the idea. They similarly represent themselves as a “modern version of the traditional neighborhood bakery where people are always


welcome to stroll in, sample their unique product and delicious treats, and linger a while to enjoy the entertaining baking process and warm, friendly atmosphere.” Cinnabon offers an experience, much like the Krispy Kreme experience. Of particular importance to Cinnabon’s strategy is their Express Packs ™ they have designed packaging made to seal in the warmth and freshness of their products until you get them home and are ready to eat.

SWOT ANALYSIS

SWOT Analysis, which is based on thorough review of the business (corporation, product category competition, customers and products), identities and evaluates the internal strengths and weakness of the companies well as its external threats and opportunities. The marketing mix is driven by the results of the SWOT analysis.

STRENGHTS:1. Strong Brand Recognition and Recall2. Krispy Kreme makes it possible for different

organizations throughout the community to use their product as a fundraiser. Fundraising program has helped non-profit organizations raise millions of dollars in needed funds.

3. Krispy Kreme has Strong Channel of Distribution.Krispy Kreme is most popular in grocery and convenience stores which gives customers easy access to the product.

4. Employees are better trained.5. Expanded assortment of offerings at KKD stores

including beverages6. It has a unique brand and variety of freshly made

donuts.Wide appeal of signature hot original glazed doughnuts

7. KKD can offer to have customers watch product being made at the donut theater.

8. It has a high capacity to make 4,000 to 10,000 donuts daily.

9. Krispy Kreme Doughnuts prides themselves on high customer satisfaction with fresh quality donuts.

OPPORTUNITIES:1. Growth in two-income households will

increase snack-food consumption2. Untouched domestic locations3. Increasing popularity of coffee shops

and bakery cafes4. Customer receiving "Hot-Donut" now

instead of waiting 5. All equipment and Uniforms are

supplied6. Penetration into foreign/intl. Markets

and popularity of American foods and fashion in overseas markets

7. Americans continue to experience time-starvation

8. Acquisition of Atlanta Bread 9. Expansion of new locations (Maine,

Mass)10. Entertaining opportunities moving

from home to work environment11. Channel expansion possibilities (i.e.,

Internet pre-ordering)12. Technological advancements (i.e.,

paperless ordering, predictive


10. It offers additional products through businesses acquisitions.

11. Krispy Kreme offers a product that is second to none, with regards to taste, freshness and the finest ingredients. It has a great desire for growth and success of people and company.

12. KKD has great service and innovation.13. Krispy Kreme has Doughnut machine

Technology. It also has e-commerce which gives owners access to real-time information.

14. KKD has a drive through window for sales.15. It also has a new fall product line of donut

called Spice.16. It is expanding into Dunkin Donuts territory.

modeling software, hand held computers for delivery drivers)

13. On-Premise sales royalties (3%).The higher the sales, the more money received

WEAKNESSES:1. Lack of more International locations in the

United Kingdom, Japan and Spain2. Manufactures all equipment internally in its

Manufacturing and Distribution Department3. Non-interactive website 4. No online ordering capability 5. Uncertainty of International markets6. KKD snacks are not healthy (need to consider

low-calorie donut)7. Perishability of product8. Limited product line (heavy reliance on

doughnut sales)9. Overextended (i.e., Montana Mills acquisition)10. Pricing in some locations11. Bad Relations with Franchisees (cost of

equipment, packaging, ingredients etc)12. No other Standout Products (Weak Menu)

THREATS:1. Competitors like Dunkin Donuts, Tim

Horton’s,Starbucks and other National Chains/Specialty Eateries.

2. Low-carb trend in eating preferences3. Increasing cost of Ingredients4. Increasing utility and fuel costs5. All-natural, organic, healthy eating

trends6. Krispy Kreme stores went up too fast7. Cultural differences in breakfast and

snack foods8. Increase in eating at full-service

restaurants combined with a decrease in the use of fast-food restaurants

9. Store locations too scattered


EXTERNAL FACTOR EVALUATION MATRIX (EFE)

EXTERNAL FACTOR EVALUATION (EFE) MATRIX OF Krispy Kreme DoughnutsKey External Factors Weight Rating Weighted

Score Opportunities1 Growth in two-income households will increase

snack-food consumption0.14 4 0.56

2 Untouched domestic locations 0.09 3 0.273 Increasing popularity of coffee shops and

bakery cafes0.06 3 0.18

4 Channel expansion possibilities (i.e., Internet pre-ordering)

0.07 4 0.28

5 Penetration into foreign/intl. Markets 0.08 3 0.246 Technological advancements 0.05 3 0.157 Acquisition of Atlanta Bread 0.04 2 0.088 On-Premise sales royalties 0.04 2 0.08Threats1 Competitors like Dunkin Donuts, Tim Horton’s,

Starbucks and other National Chains/Specialty Eateries.

0.10 2 0.2

2 Increasing cost of Ingredients 0.08 1 0.083 Store locations too scattered 0.07 2 0.144 Increase in eating at full-service restaurants

combined with a decrease in the use of fast-food restaurants

0.08 3 0.24

5 Cultural differences in breakfast and snack foods

0.04 2 0.08

6 All-natural, organic, healthy eating trends 0.06 1 0.06

TOTAL 1.00 2.64Total weighted score for the Krispy Kreme external Factors is 2.64 whichindicates that the business has above average ability to respond to external factors.


INTERNAL FACTOR EVALUATION (IFE) MATRIX of Krispy Kreme Doughnuts

Key Internal Factors Weight Rating Weighted Score

Strengths

1 Strong Brand Recognition and Recall 0.14 4 0.56

2 Wide appeal of signature Hot Original Glazed Doughnuts

0.08 4 0.32

3 Strong Channel of Distribution 0.06 3 0.18

4 Customers watch product being made at the Donut Theater

0.05 3 0.15

5 High customer satisfaction with Fresh Quality Donuts. 0.08 4 0.32

6 Doughnut machine Technology 0.09 3 0.27

7 Gained Reputation through various fundraising programs

0.05 3 0.15

8 New fall product line of donut called Spice 0.04 3 0.12

Weaknesses

1 Lack of more International locations in the United Kingdom, Japan and Spain

0.10 1 0.1

2 Limited product line (heavy reliance on doughnut sales)

0.09 1 0.09

3 KKD snacks are not healthy (need to consider low-calorie donut)

0.06 2 0.12

4 No online ordering capability 0.05 1 0.05

5 Bad Relations with Franchisees (cost of equipment, packaging, ingredients etc)

0.06 2 0.12

6 Pricing in some locations 0.05 1 0.05

TOTAL 1.00 2.6

Total weighted score for the Krispy Kreme internal factor is 2.6 which is above average.So it is internally strong and aggressive approach.


INTERNAL FACTOR EVALUATION (IFE) MATRIX

WEIGHTED COMPETITIVE STRENGTH ASSESMENTKey Success Factor/Strength Measure

Weight Krispy Kreme

Dunkin Donuts

Tim Horton’s

Starbucks McDonalds

Quality/Product Performance

0.15 8/1.2 7/1.05 5/0.75 9/1.35 6/0.9

Reputation/image 0.10 8/0.8 9/0.9 4/0.4 8/0.8 5/0.5

Manufacturing capability

0.20 7/1.4 8/1.6 5/1 9/1.8 6/1.2

Technological skills 0.05 7/0.35 6/0.3 4/0.2 8/0.4 7/0.35

Dealer network/distribution capability

0.05 4/0.2 6/0.3 4/0.2 7/0.35 5/0.25

New product innovation capability

0.05 6/0.3 5/0.5 5/0.25 8/0.4 5/0.25

Financial Resources 0.05 5/0.25 6/0.3 4/0.2 5/0.25 3/0.15

Relative cost position 0.05 5/0.25 4/0.2 5/0.25 6/0.3 5/0.25

Customer Service Capability

0.30 7/2.1 8/2.4 7/2.1 7/2.1 8/2.4

Sum of Weights 1.00

Weighted Overall Strength rating

6.85 7.55 5.35 7.75 6.25

Analysis of Weighted Competitive Strength Assessment:

The Firm with the largest overall competitive strength rating enjoying the strongest competitive position is Starbucks followed by Dunkin Donuts and then Krispy Kreme. Here Krispy Kreme score exceeds Tim Horton’s and McDonalds. So Krispy Kreme is at net competitive disadvantage against Starbucks and Dunkin Donuts.


Krispy Kreme attempts to win their market share through superior doughnut quality and vertically integrating back into their company to generate sales in coffee and other beverages.The strategic plan of Krispy Kreme Doughnuts is to produce hot, fresh doughnuts that a customer can receive right off of the assembly line. They create business through sales at company-owned stores, royalties from franchised stores along with franchise fees, and selling franchised stores pre-made doughnut mixes and doughnut making equipment. They created sales volume from both on-premise sales at Krispy Kreme stores and off-premise sales at supermarkets and convenience stores.

Krispy Kreme strategic plan changed store operations to showcase their superior product and allow flexibility of new store sizes. Every Krispy Kreme store is designed as a doughnut theater which allowed customers to see the entire doughnut process take place. After doughnuts were produced, stores turned on neon signs saying HOT DOUGHNUTS NOW. The major strength of Krispy Kreme is their product, and people come here because this is the only place that you can receive a fresh hot doughnut. Krispy Kreme has also started to alter store sizes because some markets do not require the standard 7,000 square-foot store.

Another major advantage to Krispy Kreme is the vertical integration that took place with Digital Java Inc. Now Krispy Kreme can control the sourcing and roasting of their own coffee which ensures that the company has strict quality standards and consistency. They have also created Krispy Kreme Manufacturing and Distribution that has produced sales to their franchisees by providing equipment to their stores.

One of the problems with Krispy Kreme is that the U.S. is becoming more health conscious. Although they have provided low-calorie alternatives, people eat doughnuts for the taste, especially Krispy Kreme doughnuts. When former owners Beatrice Foods bought Krispy Kreme in 1976 and changed the recipe, there was a public outcry and sales declined. It is believed that the low-calorie market will not be lucrative for Krispy Kreme because people associate us with a certain taste of a hot, fresh doughnut.The supermarket sales may also affect brand image. Although 50% of company revenue is due to supermarket and convenience stores,these stores do not create the same taste that is associated with Krispy Kreme.Doughnuts will have sat out all day and dried up creating a different taste from what Krispy Kreme is about. This could create negative customer opinion about the product and led to lost customers.

Strength of Krispy Kreme is how many different ways they have created income. Krispy Kreme creates 66% of their 665,592,000 annual income from company store operations, 4% from franchising operations, and 30% from KK manufacturing and distribution in 2004. Strength of Krispy Kreme is store operations. Since customers come to Krispy Kreme for the warm doughnuts, they have created a 40-foot glass window that allows customers to view the entire


doughnut making process. Krispy Kreme uses their strategic plan of superior, hot, fresh doughnuts to their advantage by allowing all customers to view the creation process.

A weakness of Krispy Kreme is that it continues to try and grow when all financial data indicates that franchisees are competing with each other rather than rivals. When stores are located near each other, they affect the sales volume of the other store. When the first Krispy Kreme is put up in a new market, obsessed consumers camp outside for days to be the first to have a fresh doughnut. As more and more stores are introduced into an area, this frenzy fades and the craze dies out.

Krispy Kreme could explore is further expansion into the global market. The majority of Krispy Kreme sales come from cult-like followers that will do anything for a Krispy Kreme doughnut. This following could be extended into other foreign markets besides Canada and England. There are opportunities to expand their coffee company, Digital Java Inc., and create new ways to provide fresh doughnuts to the public.

Threats that Krispy Kreme faces are competitive pressure from Dunkin Donuts and increase interest in low-calorie and low-carbohydrate diets. Americas recent health interest has had a major impact on companies such as Krispy Kreme. Analysis of Krispy Kreme shows that although there is a strong loyalty towards the product, there could be a drop in revenues due to the recent craze.

After quantitatively analyzing the current market with a weighted competitive strength assessment, it can be concluded that Dunkin Donuts has a few distinct advantages over Krispy Kreme that will allow more lasting power for Dunkin Donuts. Although Krispy Kreme outperforms DunkinDonuts in taste and freshness, Dunkin Donuts sweeps all of the other categories. They have greater manufacturing capabilities, distribution capabilities, customer awareness, lasting power, and coffee taste. Dunkin Donuts has expanded their market to all areas of the U.S. which has led them past Krispy Kreme in customer recognition. Krispy Kreme has focused the majority of their stores in the south east of the U.S. Although Krispy Kreme provides superior taste, this taste can only be provided at in-store locations. Winchell Donut House is able to compete with Krispy Kreme in taste and freshness, but all other aspect are lacking.

It can be recommended that Krispy Kreme Donuts backs out of some of their current markets. Consumers come to Krispy Kreme to receive a warm, fresh donut that is created right before their eyes. Only so many consumers are interested in this type of donut and Krispy Kreme stores rivaling each other. Stores are competing against each other for the same market share which is having an adverse effect on the overall company. Krispy Kreme seizes expansion into current U.S. markets. This will allow Krispy Kreme to see the strengths of each market, in order to decide if expansion and contraction is the possible solution to Krispy Kreme problems.


Krispy Kreme must also restore shareholder loyalty in order for stock prices to turn around. When Scott Levingood and his management team were controlling Krispy Kreme, many accounting errors took place that led to customer dissatisfaction and disloyalty of the shareholders. For Krispy Kreme to turn around, the customer and shareholder loyalty is restored.

The final issue that should be addressed is the possible withdraw from supermarkets. Although this accounts for 50% of revenue for Krispy Kreme Donuts, they are destroying product identification. Consumers expect to taste a certain donut every time they bite into a Krispy Kreme glazed donut. When these donuts have been sitting out for 15 hours, this is not the same warm, fresh taste the people relate to. Krispy Kreme should either withdraw their product from supermarkets or change the process in order to provide freshness with every donut.

I/E MATRIX


So as the V quadrant suggests a defending approach, Krispy Kreme is suggested to adapt the hold and maintain strategy that concerns mainly with market penetration and product

development.

TOWS MATRIX

OPPORTUNITIES SO STRATEGIES WO STRATEGIES

1. Increasing popularity of coffee shops and bakery cafés

1. Development of bakery cafés 1. Increase products offered in locations (i.e., coffee, sandwiches)

2. Popularity of American foods and fashion in overseas markets

2. Development of store locations in overseas markets

2. Develop Montana Mills in a way that fits the mission of KKD

3. Growth in two-income households

3. Increase locations to be convenient for busy traffic areas in several markets

3. Increase locations

4. Americans continue to experience time-starvation

4. Provide special offerings geared towards encouraging people to bring doughnuts to work

4. Offer standardized, but value pricing compared to Starbucks


STRENGTHS WEAKNESSES

1. Strong brand recognition and recallPerishability of product

2. Wide appeal of signature glazed doughnutsLimited product line (heavy reliance on doughnut sales)

3. Vertical integrationOverextended (i.e., Montana Mills acquisition)

4. Development in international marketsLack of locations in some areas

5. Strong channel of distributionPricing in some locations

5. Entertaining opportunities moving from home to work environment

5. Continue to be innovative in technological applications that can improve efficiency

THREATS ST STRATEGIES WT STRATEGIES

1. Competitors like Dunkin Donuts and Starbucks

1. Focus on signature glazed doughnuts as a differentiating advantage over competitors

1. Develop new product offerings

2. Increase in eating at full-service restaurants combined with a decrease in the use of fast-food restaurants

2. Offer nutritional information with an emphasis on new low-carb, low-calorie, or organic offerings

2. Offer value-based and consistent pricing

3. Low-carb trend in eating preferences

3. Develop low-carb doughnuts

4. All-natural, organic, healthy eating trends

4. Develop doughnut made with organic ingredients

Tows Matrix AnalysisAfter doing the analysis of Krispy Kreme in terms of its strengths, weaknesses,

opportunity and threats we were able to figure out that Krispy Kreme's major strength is its strong brand recognition. Customers are well-aware of signature glazed doughnuts which makes it a trademark for Krispy Kreme. It also has a strong channel of distribution which makes it easily available to its customers. However, the problem area for Krispy Kreme is basically its limited product line; it relies too much on the sales of its doughnuts. It needs to come up with innovative products as its competitors can always have a fair chance of stealing away Krispy Kreme's customers. In order to retain its customer base, it is really important that Krispy Kreme should try to diverse its product lines. Another major problem lies with the absence of its stores in some areas, while the pricing of its products in the other areas. The management needs to analyze the products demand and the potential in various areas, and based on the analysis it must open the branches wherever suitable. it also needs to take care of the pricing of the products and it should see the products should not be over-priced in some areas where the customer cannot afford to spend much on the food items.

Krispy Kreme can see its major opportunities lying in the fact that there is an increase in the popularity of coffee shops and bakery cafes and its has become a hotspot for youngsters as well aged-population where people can come to relax and have an informal meeting with their colleagues. So it should make use of this opportunity and should come with better ideas to cater the market.


Some of the recommendations we can come up with after analyzing Krispy Kreme's strengths, weaknesses, opportunity and threats would be that it must development of bakery cafés, it must development of store locations in overseas markets, it should also Increase locations to be convenient for busy traffic areas in several markets and it should provide special offerings geared towards encouraging people to bring doughnuts to work

Krispy Kreme in order to overcome its weakness and avail the opportunities needs to increase products offered in locations (i.e., coffee, sandwiches) and offer standardized, but value pricing compared to Starbucks.

Kripy Kreme needs to focus on signature glazed doughnuts as a differentiating advantage over competitors, it must Offer nutritional information with an emphasis on new low-carb, low-calorie, or organic offerings besides it must also develop low-carb doughnuts. Doing all this can significantly help it develop a competitive edge over its rivals.

SPACE MATRIX

Internal Strategic Position External Strategic Position

Financial (FS)+6 best, +1 worst

+_1_ Return on investment+_1_ Leverage+_3_ Liquidity+__1 Working capital+_1_ Cash flow+_1_ Ease of exit from market+__4 Risk level of business+ __1.7_ average

Environmental (ES)-1 best, -6 worst

-3_ Stage of technological life cycle-3_ Rate of inflation-2__ Demand variability-2__ Price range of competing offerings-1__ Barriers to entry into market-4__ Competitive pressure-3__ Price elasticity of demand-2.57___ average

__-0.87__y-coordinate

(FS + ES)Competitive (CA)-1 best, -6 worst

-3__ Market share-2__ Price/quality ratio-3__ Product life cycle-2__ Customer loyalty-2__ Competition's capacity utilization-2__ Technological know-how-3__ Bargaining power-2.43____ average

Industry (IS)+6 best, +1 worst

+3__ Stage of industry/alliance evolution+3__ Growth potential+4__ Profit potential+4__ Financial stability+4__ Technological know-how+4__ Resource utilization+3__ Capital intensity+3.57___ average

__1.14__x-coordinate

(CA + IS)

Vector magnitude: square root of (y2 + x2) = _1.44____ versus maximum 7.07 = ___weak______(strong, medium, weak)

SPACE Matrix Analysis

FS


IS

AggressiveIntensive Integration +6Diversification +5

+4 +3

+2+1

v = 1.44 0

ConservativeIntensive,concentricdiversification

CA+6 +5 +4 +3 +2 +1 0

-1-2-3-4-5-6

Integration,Intensive

Competitive

-1 --2 -3 -4 -5 -6

Retrenchment, divestiture, liquidation, concentric diversification

Defensive

ES

The framework of space matrix recommends that Krispy Kreme pursue an integration as well as an intensive strategy albeit we have more confidence in the intensive strategies. The strategy that seems to make the most sense is the product development as it will create the most economic value added, i.e. the build – a – burger aisle or a healthy fare menu.

GLOBAL REVENUE

BUSINESS AND FINANCIAL METRICS


First quarter of fiscal year 2011

Krispy Kreme reported revenues decreased 1.4% to $92.1 million from $93.4

million during the first quarter of 2010. Excluding the effects of refranchising Company

stores, revenues rose 0.4%. Company same store sales rose 3.4%, the sixth consecutive

quarterly increase. Operating income increased 4.8% to $6.1 million from $5.8 million. Net

income was $4.5 million, or $0.06 per share diluted, compared to $1.9 million, or $0.03 per

share diluted in the first quarter last year. The Company ended the first quarter of fiscal

2011 with a total of 616 Krispy Kreme stores systemwide, a net increase of 34 locations

since January 31, 2010.

COMPARITIVE INCOME STATEMENT 2009 2008 2007 2006 2005

Revenue 383.98 429.32 461.2 543.36 707.77Total Revenue 383.98 429.32 461.2 543.36 707.77 Cost of Revenue, Total 345.01 380.01 389.38 474.59 598.28Gross Profit 38.98 49.31 71.82 68.77 109.49 Selling/General/Administrative Expenses, Total

23.46 26.3 48.86 67.73 55.3

Research & Development 0.0 0.0 0.0 0.0 0.0Depreciation/Amortization 8.71 18.43 21.05 28.92 31.93Interest Expense (Income), Net Operating

0.0 0.0 0.0 0.0 0.0

Unusual Expense (Income) 0.55 57.34 28.49 90.9 163.39Other Operating Expenses, Total

1.5 0.01 1.92 -1.74 0.0

Operating Income 4.76 -52.78 -28.5 -117.03 -141.14 Interest Income (Expense), Net Non-Operating

0.0 0.0 0.0 0.0 0.0

Gain (Loss) on Sale of Assets 0.0 0.0 0.0 0.0 0.0Other, Net 2.82 -2.97 -0.45 0.0 -0.4Income Before Tax -3.56 -64.73 -41.03 -136.54 -147.38


Income Tax - Total 0.5 2.32 1.21 -0.78 9.67Income After Tax -4.06 -67.05 -42.24 -135.76 -157.05 Minority Interest 0.0 0.0 0.0 0.0 0.0Equity In Affiliates 0.0 0.0 0.0 0.0 0.0U.S. GAAP Adjustment 0.0 0.0 0.0 0.0 0.0Net Income Before Extra. Items

-4.06 -67.05 -42.24 -135.76 -157.05

Total Extraordinary Items 0.0 0.0 0.0 0.0 -41.29

Accounting ChangeDiscontinued OperationsNet Income -4.06 -67.05 -42.24 -135.76 -198.34

Total Adjustments to Net Income

0.0 0.0 0.0 0.0 0.0

Preferred DividendsGeneral Partners' Distributions Basic Weighted Average Shares

65.94 63.81 61.87 61.81 61.63

Basic EPS Excluding Extraordinary Items

-0.06 -1.05 -0.68 -2.2 -2.55

Basic EPS Including Extraordinary Items

-0.06 -1.05 -0.68 -2.2 -3.22

Diluted Weighted Average Shares

65.94 63.81 61.87 61.81 61.63

Diluted EPS Excluding Extrordinary Items

-0.06 -1.05 -0.68 -2.2 -2.55

Diluted EPS Including Extraordinary Items

-0.06 -1.05 -0.68 -2.2 -3.22

Dividends per Share - Common Stock Primary Issue

0.0 0.0 0.0 0.0 0.0

Gross Dividends - Common Stock

0.0 0.0 0.0 0.0 0.0

Interest Expense, Supplemental 10.68 9.8 20.33 20.21 6.88Depreciation, Supplemental 8.1 17.8 20.3 27.9 30.91 Normalized EBITDA 14.02 22.99 21.04 2.78 54.18Normalized EBIT 5.31 4.56 -0.01 -26.14 22.25Normalized Income Before -3.01 -7.39 -12.53 -45.64 16.01


TaxNormalized Income After Taxes

-3.7 -29.78 -23.72 -76.68 -50.85

Normalized Income Available to Common

-3.7 -29.78 -23.72 -76.68 -50.85

Basic Normalized EPS -0.06 -0.47 -0.38 -1.24 -0.83Diluted Normalized EPS -0.06 -0.47 -0.38 -1.24 -0.83Amortization of Intangibles 0.61 0.63 0.75 1.02 1.03

KRISPY KREME’S FINANCIAL RATIOS ANALYSISKey Ratios

Growth Rate % Krispy Kreme Industry

Sales (qtr vs year ago qtr) -11.40 5.00

Net Income (YTD vs YTD) NA 34.70

Net Income (qtr vs year ago qtr) 59.40 30.20

Sales (5 years annual average) -9.97 6.20

Net Income (5 years annual average) NA 14.37

Dividens (5 years annual average) NA 24.05

Price ratio

Current P/E Ratio NA 17.3

P/E Ratio 5 Years High NA 6.7

P/E Ratio 5 years Low NA 3.8

Price/Sales Ratio 0.74 2.35

Price/ Book Value 4.26 6.29

Price/Cash Flow Ratio 35.60 11.60


Profit Margin %

Gross Margin 13.9 35.3

Pre-tax Margin 0.3 5.1

Net Profit Margin -0.3 13.6

5 Years Gross Margin (Average) 13.4 36.3

5 Years Pre-Tax Margin (Average) -15.6 15.1

5 Years Net Profit Margin (Average) -16.1 10.6

Financial Condition

Debt/Equity Ratio 0.81 2.16

Current Ratio 1.5 1.0

Quick Ratio 1.2 1.0

Interest Coverage 0.9 25.6

Leverage Ratio 2.8 4.2

Book Value/Share 0.90 11.94

Investment Return %

Return on Equity -1.6 54.2

Return on Assets -0.5 12.5

Return on Capital -0.7 14.9

Return on Equity (5 Years Average) -55.5 27.8

Return on Assets (5 Years Average) -21.7 9.8

Return on Capital (5 Years Average) -29.7 12.2

Management Efficiency

Income/Employee -254 10,444

Revenue /Employee 91,067 98,255

Receivable Turnover 17.1 49.5

Inventory Turnover 18.7 97.5

Assets Turnover 1.9 1.1

5 Years Summary


Date Average P/E Price/Sales Price/Book Net Profit Margin (%)

02/09 -51.30 0.24 1.62 -1.1

02/08 -6.20 0.43 3.34 -15.6

01/07 -13.10 1.73 10.22 -9.2

01/06 -3.00 0.61 3.03 -25.0

01/05 -7.60 0.75 2.22 -22.2

Date Book Value/Share Debt/Equity ROE

(%)

ROA (%) Interest

Coverage

02/09 $0.86 1.30 -7.0 -2.1 0.4

02/08 $0.87 1.35 -118.5 -33.1 -5.4

01/07 $1.26 1.36 -53.5 -12.1 -1.4

01/06 $1.76 1.13 -124.9 -33.0 -5.8

01/05 $3.90 0.61 -65.2 -32.7 -20.5

Net Worth Analysis

1. Stockholder’s Equity + Goodwill 81.62

2. Net Income -4.06

3. Share Price = EPS x Net Income 0.24

4. Number of Shares Outstanding x Share Price 16.20

Method Average 94


REFERENCES

http://krispykreme.com

http://www.spokesmanreview.com/allstories-news-story.asp?date=051304&ID=s1519337

http://www.businesspundit.com/krispy-kreme-part-ii-a-bad-strategy/

http://www.businesspundit.com/krispy-kreme-and-wal-mart/

http://www.allbusiness.com/marketing-advertising/branding-brand-development/4675339-1.html

http://www.philly.com/inquirer/business/20101114_Krispy_Kreme_back_in_Philly_with_new_business_recipe.html

http://abcnews.go.com/Business/story?id=87804&page=2

http://www.morebusiness.com/franchise-risks

http://www.abc.net.au/unleashed/40808.html

http://www.wikiswot.com/SWOT/backup.php?id=krispy_kreme_going_global&time=1289774917

http://www.angelfire.com/indie/dannydiab/fin821kkd.htm


http://www.angelfire.com/indie/dannydiab/fin821kkd.htm



http://www.abc.net.au/unleashed/40808.html

http://www.morebusiness.com/franchise-risks

http://abcnews.go.com/Business/story?id=87804&page=2



http://www.allbusiness.com/marketing-advertising/branding-brand-development/4675339-1.html

http://www.businesspundit.com/krispy-kreme-part-ii-a-bad-strategy/

http://www.spokesmanreview.com/allstories-news-story.asp?date=051304&ID=s1519337

http://krispykreme.com/

http://www.redorbit.com/news/business/1107290/by_2011_the_global_fast_food_market_is_forecast_to/




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